Barclays quarterly profit more than doubles as investment bank fees surge

Barclays’ profit more than doubled in the third quarter driven by another strong performance from its investment bank, while the impact of coronavirus on its consumer divisions continued to recede.

Net income jumped to £1.45bn from £611m in the same period last year, Barclays said on Thursday, beating analysts’ expectations of £1.1bn. Revenue rose 5 per cent to £5.47bn, compared with the £5.2bn estimate.

Part of the surge in net profit was due to a drop in new loan-loss provisions. They fell to £120m compared with £608m in the third quarter last year, when the bank was forced to set aside more to cover potential bad loans caused by coronavirus lockdowns.

Barclays added that it expects impairments to remain lower than average as unsecured borrowing by credit card customers is subdued and due to the “improved macroeconomic outlook”.

The investment bank had another good quarter, particularly in capital markets and M&A, where fees increased 59 per cent to £971m overall, similar to the big gains posted by Wall Street rivals last week.

Revenue from M&A advisory surged to £253m in the quarter from £90m last year as the global dealmaking boom continued, while equity and debt capital markets both posted gains.

Equity trading increased 10 per cent, but there was a 20 per cent plunge in fixed-income trading income as market volatility returned to normal following the pandemic chaos of mid-2020.

Overall pre-tax profits at the investment banking unit rose 51 per cent to £1.5bn, beating estimates for £1.1bn.

Barclays chief executive Jes Staley said “while the investment bank performance continues to be an area of strength, we are also seeing evidence of a consumer recovery and the early signs of a more favourable rate environment”.

Pre-tax profits at the UK retail banking business rose to £451m from £196m due to a combination of lower impairment charges and higher fees from rebounding customer activity.

However, Staley also warned that the lender is planning “structural cost actions before the end of the year”, particularly in its domestic market, without providing details on branch closures or job cuts.

Citigroup analyst Andrew Coombs said: “Overall a good set of numbers, albeit driven by a record quarter for investment banking advisory revenues, so the beat may not be fully extrapolated into future quarters.”

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